Anrig v. Ringsby United

• Decision Date: 13 November 1978
• Docket Number: No. 77-1202,77-1202
• Citation: 591 F.2d 485
• Parties: Philip ANRIG et al., Plaintiffs-Appellants, v. RINGSBY UNITED et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 485

591 F.2d 485

Philip ANRIG et al., Plaintiffs-Appellants, v. RINGSBY UNITED et al., Defendants-Appellees.

No. 77-1202.

United States Court of Appeals, Ninth Circuit.

Nov. 13, 1978.

Rehearing and Rehearing En Banc Denied March 13, 1979.

Bruce A. Wolf (argued), of Rutherford, Kargianis & Austin, Seattle, Wash., for plaintiffs-appellants.

Edward L. Mueller (argued), of Carney, Stephenson, Siqueland, Bradley, Smith & Mueller, Seattle, Wash., for defendants-appellees.

Appeal from the United States District Court for the Western District of Washington.

Before DUNIWAY and CHOY, Circuit Judges, and GRANT ^*, District Judge.

GRANT, District Judge:

This appeal involves procedural issues arising from an attempt by a group of multi-state plaintiffs to bring suit against corporate and individual defendants of varied residences. The court below dismissed the entire action for lack of venue and plaintiffs now appeal that dismissal.

The underlying dispute concerns numerous lease agreements whereby the individual sets of plaintiffs (usually married couples) agreed to lease trucking equipment, consisting of tractor and trailer units, from the defendants. The terms of the agreements are not relevant to this appeal but plaintiffs allege that the lease agreements required the lessees (plaintiffs describe themselves as investors) to devote the equipment to the exclusive use of the defendants. In other words, the plaintiffs alleged that they were irrevocably tied to defendants, precluded from seeking freight traffic of their own, and forced to rely upon defendants for the essential management and administration of the lease agreements which plaintiffs characterize as "investment contracts". Plaintiffs allege that defendants, after securing the initial lease agreements from the investors, began an intentional program of substantially reducing and delaying the number of dispatches to each investor, delaying revenue commissions, and assessing excessive operating expenses. The plaintiffs claim this caused them to default in making their payments and defendants then repossessed the trucking equipment, allegedly resulting in plaintiffs' financial ruin. Plaintiffs claim that if it were not for the wrongful acts of the defendants, the lease plan would have been successful.

The named defendants are two corporations and eleven specifically named individuals who are alleged to be officers and/or directors of one or the other corporations. Ringsby-Pacific, Ltd., is a California corporation with its principal place of business in Colorado. Ringsby Truck Lines, Inc., is a Nebraska corporation, also with its principal place of business in Colorado. Nine of the eleven individual defendants (one deceased) reside in Denver, while two reside in Texas.

The plaintiffs are fourteen married couples and one partnership consisting of two men. Seven sets of plaintiffs reside in Nevada, four sets reside in the State of Washington, two sets reside in California, one set resides in Wyoming, and one set resides in Colorado. Originally, plaintiffs attempted to bring a class action against the defendants but the certification of the class was denied and that effort was abandoned by the plaintiffs.

Plaintiffs' original complaint was filed on 14 April 1976, wherein damages were sought for fraud, misrepresentation, breach of contract, restraint of trade and unfair business practices in violation o the Clayton Act, and sale of unregistered securities in violation of the Securities Act of 1933. Subject matter jurisdiction was based on federal question and diversity. The record shows (R. 16-18) that copies of the summons and the complaint were served upon the U.S. Corporation Company, Seattle, Washington, the registered agent for both corporate defendants. Additionally, service was made upon an assistant secretary at the corporate offices in Colorado. On 9 June 1976, an amended complaint was filed and served upon the defendants' Seattle attorney, Edward L. Mueller. The defendants filed motions to (1) dismiss for lack of venue, (2) dismiss the individual defendants for lack of person jurisdiction, (3) change venue, (4) sever plaintiffs' claims, (5) strike the amended summons and complaint, (6) dismiss plaintiffs' claim pursuant to the Securities Act for failure to state a claim, and (7) dismiss plaintiffs' claim of fraud for failure to state a claim.

After four lengthy memorandums were filed by the parties, the trial court issued a memorandum and order on 11 November 1976 granting defendants' motion to dismiss for lack of venue, following which plaintiffs filed a motion to vacate and/or to reconsider the trial court's order. The trial court entered a one-paragraph order denying plaintiffs' alternate motion. Plaintiffs filed their notice of appeal, and the record was timely transferred to the clerk of the court of appeals. Thereafter, on 15 March 1977, plaintiffs filed with the district court a motion for relief from order, pursuant to F.R.Civ.P. 60(b)(1, 6), asking that (1) the dismissal of the individual defendants be without prejudice, and (2) the dismissal of the corporate defendants be set aside. Together with the Rule 60 motion, plaintiffs filed hundreds of pages of material to show that during all times relevant to the suit, the corporate defendants were registered foreign corporations in the State of Washington and, therefore, that jurisdiction and venue over the corporate defendants were proper. On 21 April 1977 the trial court denied plaintiffs' Rule 60 motion, stating:

This Court dismissed the instant action for lack of venue after a careful review of plaintiffs' first amended complaint. That complaint was vague and imprecise, providing minimal support for federal court jurisdiction. However, viewing the allegations in the amended complaint as a whole, federal question jurisdiction could be considered based on plaintiffs' anti-trust claim. Other asserted bases of jurisdiction were either incorrectly asserted (diversity) or insufficiently alleged (federal securities law). Venue was analyzed from this jurisdictional perspective and found to be lacking.

Plaintiffs herein gave this Court insufficient information regarding defendants' contacts within this district. Not until the motion at hand did plaintiffs explicitly assert that the corporate defendants herein were licensed to do business within this State (RCW 23A.32.010, RCW 23A.40-140). Neither did plaintiffs timely suggest to this Court, at any time, that severance of the individual defendants herein constituted an acceptable alternative within the framework of F.R.Civ.P. 16.

For these reasons, the motion is DENIED.

Because of the fact that the original record from the district court had been transferred to the clerk of the court of appeals on 17 January 1977, all filings in the district court after that date (the Rule 60 motion and attachments) were not a part of the original record on appeal. For this reason the plaintiffs moved this court for leave to supplement the record on appeal. Defendants filed a memorandum in response to plaintiffs motion to supplement the record, following which the Honorable Ozell M. Trask, Circuit Judge, ordered that the proposed supplemental record be lodged with this court so that we may now consider the supplement to the extent we deem it appropriate. In the light of 28 U.S.C. Sec. 1653 which reads, "Defective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts", we will now consider the supplemental record.

The trial court's 11 November 1976 order and memorandum, dismissing the suit for lack of venue, reads in part:

The amended complaint is silent as to whether the defendants, or any of them, had any contact or connection with the State of Washington or do business within the State of Washington. It is silent as to where the individual lease agreements were negotiated with each defendant, where they were executed and where they were to be performed. It is silent as to where (or even whether) an offer or sale of a security took place. All that can be gleaned from the amended complaint insofar as State of Washington connection with the matter is concerned is that four plaintiffs are residents of this state.

Defendants have filed seven motions relating to jurisdiction and venue. As the Court is of the opinion that venue in this district is improper, the Court will not discuss the motions in detail. It is important to note, however, that diversity is lacking in that one of the plaintiffs is a resident of Colorado (as are most of the defendants). It is also important to note that purported service of process on all of the defendants was accomplished by service on the assistant secretary of one of the defendants. The required personal jurisdiction over the other defendants is therefore questionable.

As noted above, plaintiffs' amended complaint is somewhat obscure, and it is the considered opinion of this Court that if venue were to lie in this case, it would be pursuant to the special venue provisions of the Clayton Act, which place venue where the defendants reside, are found, or have an agent. None of the defendants reside in the State of Washington, nor does it appear that any of the defendants have an agent in the State of Washington. The record before this Court does not indicate that any of the defendants may be found in the State of Washington, although one might surmise that either by affidavit or through discovery one or more of the corporate defendants might be found within this district. The problem is that none of the individual defendants would meet this test.

Plaintiffs' response to this problem is apparently the co-conspirator theory suggested in Giusti v. Pyrotechnic Ind., Inc., 156 F.2d 351 (9th Cir.1946). This approach, however, has been largely discredited in favor of the interpretation that Congress established detailed venue provisions as to each defendant in civil antitrust cases. Even if...